The Basics of Forming a Nonprofit

To ensure the success of your nonprofit organization, you need to start with a solid foundation. Take a look at the following fundamentals checklist so your nonprofit is set up properly and legal issues are covered right from the beginning.

Clearly define your mission and its scope: Every nonprofit has a mission. Make sure your nonprofit’s mission is clearly defined and concisely written. It should reflect the shared goals of everyone involved in establishing the organization.

Put together a business plan and system: The organization should identify the sources and uses of its funds. It should also figure out whether it can be viable in the long run.

Adopt a set of bylaws: Bylaws serve as the constitution of your organization. You might start by using standard forms, but do make sure that issues of major importance to your organization are clearly addressed.

Recruit a board: Nonprofit organizations are run by boards of directors or trustees. Recruiting the right board can mean the difference between success and failure of a nonprofit’s mission.

Hold an organizational meeting and define duties and responsibilities: This step is important to do early on because it allows you to make sure that formalities are dealt with before the organization becomes engrossed in fulfilling its mission.

File for tax-exempt status with the IRS: Tax-exempt status is not automatic; it must be awarded by the IRS. Your organization must file the necessary paperwork and qualify under the law for exempt status.

Register with your state: State requirements vary, but most require you to follow a certain registration process so that the states can track which nonprofits exist within their borders. Most states also require a separate registration process if funds will be solicited within their borders.

Get staff and volunteers in place: If your organization has day-to-day operations to perform, it’s important to figure out who will do the actual work. More importantly, you have to figure out who will supervise operations and be held accountable.

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